Sk. Emdadul, Kolkata V. ITO, Ward - 53(1), Kolkata, Kolkata

ITA 1466/KOL/2010

• Counselvise Citation: 146623514 RSA 2010
• Duration Of Justice: 1 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-05-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 19-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANADHIR GUPTA
• Assessee Lawyers: SOUMITRA CHOW DHURY; S P CHOWDHURY
• Keywords: Unexplained cash credit
• Section: 40A(3); 131; 68; 148

Judgement Text

, , , , , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [ . . . . . . . . , ,, , , ,, , . . . . . .. . ! ! ! ! , ' ' ' ' ] [BEFORE HONBLE SHRI B. R. MITTAL, JM & HONBLE SHRI S.V. MEHROTRA, AM] #$ #$ #$ #$ / I.T.A NO. 1466 1467/KOL/2010 %& '() %& '() %& '() %& '()/ // / ASSESSMENT YEARS : 2004-05 & 2005-06 SK. EMDADUL -VS.- INCOME TAX OFFICER/WARD-53(1) KOLKATA. [PAN : AQYPS 3716 R] KOLKATA. [ +, +, +, +, /APPELLANT ] ]] ] [ ./+, ./+, ./+, ./+,/ // / RESPONDENT ] ]] ] +, / FOR THE APPELLANT : S/SHRI S. P. CHOWDHURY & SOUMITRA CHOWDHURY ./+, / FOR THE RESPONDENT : SHRI RANADHIR GUPTA 0 /ORDER . . . . . .. . ! ! ! ! , ' ' ' ' PER S. V. MEHROTRA, A. M. THESE TWO APPEALS HAVE BEEN PREFERRED BY THE ASSES SEE FOR ASSESSMENT YEARS 2004-05 & 2005-06 AGAINST SEPARATE ORDERS OF LD. CIT(A)-XXXII I, KOLKATA BOTH DATED 19.05.2010. 2. THE ASSESSEE HAD FILED ITS RETURN OF INCOME IN R ESPONSE TO NOTICE UNDER SECTION 148 AT RS.1,84,094/-. THIS NOTICE WAS ISSUED BECAUSE IN TH E ORIGINAL RETURN ASSESSEE DID NOT DISCLOSE PROFIT FROM HIS NEW BUSINESS M/S. SK. EMDADUL. ASSESSING O FFICER` NOTICED THAT ASSESSEE HAD, INTER ALIA, DISCLOSED PROFIT FROM HIS PROPRIETORSHIP CONCERN, M /S SK. EMDADUL FOR RS.68,307/-. ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD RS.4,13,900/- AS UNSECURED LOAN. HE ASSESSED TOTAL INCOME AT RS.4,31,640/- AFTER MAKING FOLLOWING ADDITIONS IN R ESPECT OF INCOME RELATING TO M/S. SK. EMDADUL:- (I) UNSECURED LOAN : RS.55,000/- (II) CASH PURCHASE : RS.88,631/- (III) INTRODUCTION OF CAPITAL INCOME : RS.15,000/- (IV) RATE OF G.P. UNDISCLOSED : RS.87,918/- LD. CIT(A) DISMISSED THE ASSESSEES APPEAL. ITA NO. 1466 & 1467/KOL/2010 2 3. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), AS SESSEE IS IN APPEAL BEFORE US. ITA NO. 1466/KOL/2010 4. GROUND NO.1 IS GENERAL IN NATURE AND NEED S TO ADJUDICATION AT THIS STAGE. 5. THE FIRST ISSUE RAISED IN THE APPEAL IS REGARDIN G ADDITION OF RS.55,000/- UNDER SECTION 68 OF THE ACT. 6. BRIEF FACTS APROPOS THIS ISSUE ARE THAT NOTICES UNDER SECTION 131 WERE ISSUED AND, SUBSEQUENTLY, INSPECTOR WAS ALSO DEPUTED TO ENQUIRE ABOUT THE GENUINENESS OF TRANSACTION AND TO VERIFY THE IDENTITY AND CREDITWORTHINESS OF THE FOL LOWING LOAN CREDITORS FROM WHOM THE ASSESSEE HAD RECEIVED CASH :- (I) MEHEDI HUSSAIN MONDAL : RS.18,000/- (III) GOPAL GHOSH : RS.18,000/- (IV) BANSAR ALI : RS.19,500/- TOTAL : RS.55,500/- ASSESSING OFFICER MADE ADDITION UNDER SECTION 68 OF RS.55,500/- OBSERVING THAT CREDITWORTHINESS OF THE LOAN CREDITORS WAS IN DOUBT BECAUSE THEY HAD VERY MEAGER INCOME. BEFORE LD. CIT(A), IT WAS SUBMITTED THAT NO DETAILS OF ENQUIRY, LEADING T O THE CONCLUSION AS MENTIONED IN THE REPORT OF INSPECTOR, HAD BEEN GIVEN TO THE ASSESSEE. FURTHER, ASSESSEE WAS NOT GIVEN ANY OPPORTUNITY TO PROVE CREDITWORTHINESS OF THE CREDITORS. LD. CIT(A) CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER, WHO AGAIN REPORTED THAT THE CREDITWORTHINE SS OF LOAN CREDITORS WAS IN DOUBT AS THEY HAD MEAGER INCOME. LD. CIT(A) AFTER CONSIDERING THE ASS ESSEES SUBMISSIONS THAT THE LOAN CREDITORS HAD GIVEN THEIR CONFIRMATION, CONFIRMED THE ADDITIO N, INTER ALIA, OBSERVING THAT ASSESSEE FAILED TO ESTABLISH CREDITWORTHINESS OF THE THREE LOAN CREDIT ORS NOTED ABOVE. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. EXCEPT FILING THE CONFIRMATIONS, NO EVIDE NCE WAS BROUGHT ON RECORD TO ESTABLISH THE CREDITWORTHINESS OF THE LOAN LENDERS. FINDINGS OF A SSESSING OFFICER THAT THE LOAN LENDERS HAD MEAGER INCOME COULD NOT BE CONTROVERTED EVEN IN THE REMAND PROCEEDINGS. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). HENCE, GROUND NOS. 2 TO 4 ARE DISMISSED. ITA NO. 1466 & 1467/KOL/2010 3 8. THE NEXT ISSUE I.E. GROUND NOS. 5 & 6, IS REGARD ING DISALLOWANCE OF EXPENSES UNDER SECTION 40A(3) OF THE ACT. ON EXAMINATION OF THE BOOKS OF A CCOUNT, ASSESSING OFFICER NOTED THAT ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 40A(3) BY MA KING CASH PAYMENT IN RESPECT OF PURCHASES OVER RS.20,000/-. HE NOTED THAT TOTAL OF SUCH PURCH ASE WAS RS.4,43,155/- OUT OF TOTAL PURCHASES OF RS.7.57 LACS. THEREFORE, HE DISALLOWED 20% OF SUCH PURCHASES AND MADE AN ADDITION OF RS.88,631/-. BEFORE LD. CIT(A), IT WAS POINTED OUT THAT THE PAYMENTS WERE MADE TO LORRY OWNERS FOR TRANSPORTATION OF GOODS AND IT WAS MADE ON ACCO UNT OF BUSINESS EXPEDIENCY. LD. CIT(A) HAS OBSERVED THAT WHEN THE ASSESSEE WAS SHOWN DISCREPAN CY IN THE OBSERVATION OF THE ASSESSING OFFICER (PAYMENT FOR PURCHASES) AND CLAIM OF THE AS SESSEE (PAYMENTS WERE MADE TO LORRY OWNERS), NO EVIDENCE IN SUPPORT OF THE CLAIM THAT PAYMENT WA S MADE FOR TRANSPORTATION WAS PROVIDED. HE, THEREFORE, CONFIRMED THE ASSESSING OFFICERS ACTION . 9. LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND POINTED OUT THAT SINCE PAYMEN T WAS GIVEN TO DRIVERS, IT WAS GIVEN IN CASH. HE FURTHER SUBMITTED THAT SINCE G.P. RATE HAS BEEN APP LIED IN RESPECT OF M/S. SK. EMDADUL, THEREFORE, NO FURTHER ADDITION IS CALLED FOR. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. AS PER ASSESSMENT ORDER, THE PURCHASES R ELATING M/S. SK. EMDADUL WERE RS.7.57 LAKHS. SINCE GROSS PROFITS IN RESPECT OF M/S. SK. EMDADUL HAS BEEN DETERMINED ON ESTIMATE BASIS, THEREFORE, SEPARATE ADDITION UNDER SECTION 40A(3) I S NOT CALLED FOR. THIS GROUND OF THE ASSESSEE IS ALLOWED. 11. AT THE TIME OF HEARING, LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE DID NOT PRESS THIS GROUND NO.7 OF THE APPEAL. HENCE, THIS GROUND OF TH E APPEAL IS DISMISSED BEING NOT PRESSED. 12. THE NEXT ISSUE I.E. GROUND NOS. 8 & 9, IS REGAR DING GROSS PROFIT PERCENTAGE DISCLOSED BY THE ASSESSEE IN RESPECT OF BUSINESS IN THE NAME OF M/S. SK. EMDADUL. THE ASSESSEE HAD DISCLOSED G.P. AT 12.35% FROM HIS BUSINESS. HOWEVER, ASSESSING OFF ICER ESTIMATED THE G.P. AT 22.59% IN LINE WITH THE G.P. DISCLOSED BY ASSESSEE IN RESPECT OF I TS SIMILAR BUSINESS OF MARBLE I.E. TAJ MARBLE. THEREFORE, HE MADE AN ADDITION OF RS.87,918/- (RS.1 ,94,000/- - 1,06,082/-). LD. CIT(A) CONFIRMED ITA NO. 1466 & 1467/KOL/2010 4 THE ADDITION. 13. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. THIS WAS THE FIRST YEAR OF ASSESSEES BUS INESS THOUGH IN IDENTICAL COMMODITY. SINCE THE BUSINESS WAS SET UP DURING THE YEAR, THEREFORE, G.P . PERCENTAGE DISCLOSED IN RESPECT OF TAJ MARBLE COULD NOT BE ADOPTED FOR A NEW BUSINESS. IN OUR OPI NION, KEEPING IN VIEW OF THE FACT THAT IN INITIAL YEAR EXTRA EXPENDITURE IS TO BE INCURRED ON ESTABLI SHMENT, IT WOULD MEET THE ENDS OF JUSTICE IF THE G.P. PERCENTAGE IS DETERMINED AT 15% AS AGAINST 22. 59% DETERMINED BY THE ASSESSING OFFICER. HENCE, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWE D. 14. GROUND NO.10 IS CONSEQUENTIAL IN NATURE, THEREF ORE, NEEDS NO ADJUDICATION. ITA NO.1467/KOL/2010 15. GROUND NO.1 IS GENERAL IN NATURE AND NEEDS TO A DJUDICATION AT THIS STAGE. 16. GROUND NOS. 2 TO 4 DEALS WITH ADDITION OF RS.19 ,000/- U/S. 68 OF THE INCOME TAX ACT. 17. IN COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE F URNISHED REVISED COMPUTATION OF TOTAL INCOME DISCLOSING INCOME OF RS.81,509/- FROM HIS BU SINESS CONCERN UNDER THE NAME AND STYLE OF M/S. SK. EMDADUL WHICH WAS NOT DISCLOSED IN THE ORI GINAL RETURN. AFTER EXAMINING THE DETAILS FROM THE FINANCIAL SETTLEMENT SUBMITTED IN RESPECT OF TH IS BUSINESS, ASSESSING OFFICER, INTER ALIA, MADE FOLLOWING ADDITIONS :- (I) UNSECURED LOAN : RS. 19,000/- (II) G.P RATE : RS,1,43,358/- LD. CIT(A) WHILE PARTLY ALLOWING THE ASSESSEES APP EAL CONFIRMING THE AFOREMENTIONED ADDITIONS. 18. BRIEF FACTS APROPOS THIS ISSUE ARE THAT ASSESSI NG OFFICER NOTICED THAT ASSESSEE HAD SHOWN UNSECURED LOAN OF RS.37,000/-. ASSESSING OFFICER CA RRIED ON ENQUIRIES THROUGH INSPECTOR IN RESPECT OF TWO LOAN CREDITOR VIZ. OMAR MALLICK & MS. SUJATA DEWAN. FROM THE ENQUIRY, IT WAS REVEALED THAT MS. SUJATA DEWAN, WHO HAD ADVANCED RS.19,000/ - TO THE ASSESSEE HAD MONTHLY INCOME OF RS.500/-. THEREFORE, HE TREATED SUM OF RS.19,000/- AS UNEXPLAINED CASH CREDIT AND MADE ADDITION OF THE SAME. LD. CIT(A) CONFIRMED THE ADDITION. 19. HAVING HEARD BOTH THE PARTIES, WE DO NOT FIND A NY REASON TO INTERFERE WITH THE ORDER OF LD. ITA NO. 1466 & 1467/KOL/2010 5 CIT(A) BECAUSE THE FACT THAT LOAN CREDITOR HAD MONT HLY INCOME OF RS.500/- HAS NOT BEEN CONTROVERTED. THEREFORE, THE ASSESSEE FAILED TO EST ABLISH THE CREDITWORTHINESS OF ITS LOAN CREDITOR. THIS GROUND IS DISMISSED. 20. SECOND ISSUE RAISED VIDE GROUND NO.5 IS AGAINST THE ENHANCEMENT OF G.P. TO 22.59% AS AGAINST 10.35% RETURNED BY ASSESSEE, IN RESPECT OF NEW BUSINESS IN THE NAME AND STYLE OF M/S. SK. EMDADUL. THIS ISSUE HAS BEEN CONSIDERED IN ASSESSME NT YEAR 2004-05 VIDE GROUND NOS. 8 & 9. FOR THE REASONS STATED THEREIN AND ALSO IN VIEW OF THE FACT THAT IT IS THE SECOND YEAR OF ASSESSEES BUSINESS, WE DIRECT THE ASSESSING OFFICER TO ESTIMA TE G.P. AT 15% AND DIRECT THE ASSESSING OFFICER TO MADE ADDITION ACCORDINGLY. THIS GROUND OF THE AS SESSEE IS PARTLY ALLOWED. 21. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE PARTLY ALLOWED. 0 0 0 0 '1 '1 '1 '1 2 1% 3 4 2 1% 3 4 2 1% 3 4 2 1% 3 4 5' 5' 5' 5' ORDER PRONOUNCED IN THE OPEN COURT ON 12. 08. 2011. SD/- SD/- [ . . . . . . . . , ,, , ] [ . . . . . .. . ! ! ! ! , ' ' ' ' ] [ B. R. MITTAL ] [ S.V. MEHROTRA ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (5' 5' 5' 5') )) ) DATED : 12TH AUGUST, 2011. 0 8 .9 :9(/ COPY OF THE ORDER FORWARDED TO: 1. +, /APPELLANT : SK. EMDADUL, PROP. TAJ MARBLE, VILL & P.O. CHANDANNAGAR, MA HESHTALA, KOLKATA-700 141. 2 ./+, / RESPONDENT : INCOME TAX OFFICER, WARD-53(1), 2, GARIAHAT ROAD (SOUTH), KOLKATA-700 068 . 3. 0% / CIT, 4. 0% ()/ CIT(A), KOLKATA. 5. '3 .%/ DR, KOLKATA BENCHES, KOLKATA [/9 ./ TRUE COPY] 0%1/ BY ORDER, #A /ASSTT REGISTRAR [KKC 'BC %DA E' /SR.PS]